Mexican Currency History

Here's a short Mexican currency history since independence from Spain (from Sep 28, 1821).

Before independence, Mexico was a Viceroyalty of Spain from 1535. Before independence, Mexico's first coins, Escudos, were minted by a decree on May 11, 1535.

Later, the silver Mexican peso was introduced in 1732, and was used as a major trading currency within an are including many neighboring regions.

In fact, between Sixteenth and Nineteenth centuries, over 3 billion silver Mexican pesos were minted.

After gaining independence in 1821, Mexico continued to use the silver peso as a legal tender.

During the Mexican Revolution (1910-1917), the country fell into monetary chaos.

One of the reasons was the issuance of currency to pay for the war. These issues included paper money, which quickly depreciated in value until the paper money was made convertible to silver pesos (at a rate of 100 paper pesos to 1 silver peso).

Mexico returned to silver standard in 1916, and the country officially made Mexican Peso the official currency on November 13, 1918.

Mexican Currency History - Mexico Central Bank

Among the functions of the new Central Bank were issuing and regulation of the currency circulation in Mexico.

Because of the historical failure of paper money in Mexico, the restoration of user's trust in banknotes was one of the major problems Banco de Mexico initially faced.

Part of that restoration process was the Central Bank's own currency printing house, the Banco de Mexico Printing Works, which started operations in 1969.

Mexican Currency History - New Pesos

A new chapter in the Mexican monetary history started when, under a decree of June 18th, 1991, a new unit of the United Mexican States Monetary System was created, equivalent to one thousand pesos of the former unit.

These new units were called "new pesos" (or nuevos pesos in Spanish), to distinguish them from the older set of pesos.

The wording "nuevo" was only meant for the introductory phase of the new monetary unit, and the wording has been replaced with simply "peso" in the money printed since 1996 (also known as Type D banknotes).

Mexican Currency History - Mexican Currency Crisis of 1994

In December 1994, soon after president Ernesto Zedillo had taken office, the country entered into one of the biggest currency crises in Mexican currency history.

Soon after Zedillo entered office, he announced that the Mexican peso's currency rate would be let float freely against the U.S. dollar and the Banco de Mexico would not defend the artificially high currency rate.

This announcement led to a chaos in the forex market, with exchange rate in forex trading dropping from three pesos to the dollar to ten pesos to the dollar in the space of a week.

Because of the obvious misjudgement on part of Zedillo's newly elected administration on the effects of allowing the peso to float freely, the crisis has earned the nickname "December Mistake".

The crisis lasted about a week, but could have gone on longer and could have been more devastating to the country's economy, but due to an intervention by the Clinton administration in a form of a stabilization loan to Mexico, the currency markets calmed down.


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